General Electric Shaping up in 2010

Despite a tough week on Wall Street, General Electric (NYSE:GE) was a beacon of hope and in 2010 the stock is up 6.4%.  Looking ahead is what makes GE appealing, thanks to future buybacks, increasing revenue and most important -- growing the dividend for GE shareholders.

GE beat analyst estimates this week, the company reported net profits for the December quarter of $3.01 billion which works out to 28 cents a share. Prior year totals were earnings of $3.72 billion, or 35 cents a share.

BusinessWeek.com --  GE may not need as high a cash balance at GE Capital from a “liquidity and safety perspective” as operations become more normal, Sherin said. Instead of the current level of about $62 billion, the unit may eventually run with $40 billion to $50 billion, he said. Immelt is shrinking GE Capital’s assets.

The finance unit has already raised enough capital to fund debt coming due this year and has sold $4.4 billion of the debt it expects to refinance in 2011, the CFO said. GE Capital said in December it expects to “prefund” about $20 billion to $25 billion of 2011’s debt this year.

The company may ultimately end up with about $15 billion to redeploy on dividends, acquisitions and buybacks, Steven Winoker, a New York-based analyst with Sanford C. Bernstein & Co., wrote in a note yesterday to investors.

Potential acquisitions should range in price “from a couple hundred million to a couple billion,” Immelt said on a call with analysts after the earnings report. Any acquisition has to have a 15 percent return on cash within five years, he said.

“We always look at bolt-on acquisitions and infrastructure” and GE will be “very opportunistic” regarding a buyback, including one of preferred shares, Immelt said. “We really see the ability to grow the dividend in line with earnings by 2011.” 

GE 101: